It’s Time to Tax Companies for Using Our Personal Data

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This idea is not new. It is, essentially, a sales tax, among the oldest taxes that exist, but it hasn’t been done because assigning a fixed monetary value to our data can be very difficult. For a lot of internet businesses, our personal data either primarily flows through the business or remains locked within.

The flow-through type of business is an internet provider, like AT&T, Comcast and Verizon; the latter is a platform provider, like Facebook or Twitter. Google mostly makes platforms, like its search function and Gmail, but it also lays fiber-optic cable, providing the internet to some municipalities. The company also is making self-driving cars.

It’s perhaps easiest to consider your data as something real and physical, like a car, which, in a sense, it is. It moves around a real, physical infrastructure, owned and operated by the internet providers, and the information is also stored — or parked — on millions of hard drives in vast buildings in usually cold climes. These are owned and operated by the platform makers, including Amazon, which has a very lucrative arm that does nothing but rent out its server space.

When you use the internet, your information travels through the providers’ pipes (roads) and into and out of the platform makers’ servers (parking lots). For the most part, the platform makers rely on your data to improve their products. Google uses its immense trove of real human searches to make better artificial intelligence like transcriptions, translations and self-driving cars.

How much, exactly, these new and innovative businesses are worth is unclear even to Google. But it, and all the platform makers, don’t just improve products with our data. The companies invite advertisers into the platforms, offering to deliver advertisements to exactly the right kind of person, at exactly the right time, based off the platform makers’ intimate knowledge of us, via our data. The internet providers are less nuanced: We pay a monthly fee for access to the pipes the companies lay and the upkeep on them, but the companies also sell our data to brokers, who bundle and sell it to advertisers.

It’s this data brokerage industry that should be the primary, initial focus of the data tax. This industry exists solely to collect our information and sell it as a commodity to retailers, advertisers, marketers, even other data brokerages and government agencies.

It’s this marketplace that traffics in the actual monetary value of our data, and from it we can begin to map just how much that data might be worth overall.

The data brokerage industry generates more than $150 billion in revenue each year, but revenue is reportedly growing so fast that it’s expected to reach $250 billion by 2018. A small tax, say 0.8 percent, on data brokerages based in the United States would generate about $2 billion annually.

Microlevies like this one have been issued successfully before. Over the last decade, the governments of 10 countries, including Chile, France and Niger, have successfully raised more than 1 billion euros in funding from a tax on airline tickets of €1 to €40 depending on the class of ticket.

The money generated has gone toward global H.I.V./AIDS, tuberculosis and malaria eradication programs. In Austria, the government was considering imposing a value-added tax on the big data transactions of social media companies that benefit from personal data, but has been stymied by the complications of assigning a fixed value to such transactions.

Our data is ours, but it also is not ours. We trade it away for so much of our experience on the internet. Money from a data tax could begin to counter this trade imbalance.

The money should go toward improving privacy of our information on the internet, countering identity theft, improving connectivity and internet literacy, all causes that would help create a more equitable internet for all.

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